Stop worrying about the market
The market is full of fretters -- how have they performed over the last year?
By Jim Cramer, TheStreet
We fret too much. We fret about whether Apple's (AAPL) iPad is going to sell. We fret about every Treasury auction. We fret about Fed statements and discount rate moves. We fret about commercial real estate. We fret about housing. We fret about the weakness of the consumer. We fret about the impact of health care. We fret about the Chinese bubble. And we fret about earnings and earnings and earnings. We fret about unemployment.
Hey, it's good to fret. I used to fret all the time at my hedge fund. You aren't being critical and rigorous enough if you aren't fretting. It is a little ridiculous to believe that everything is going to work out just right.
However, action taken based on fretting has been, since the bottom, just plain wrong. Look at those insurers yesterday. They were all supposed to be dead meat.
I had a conversation with the head of Genworth (GNW) last year about whether my insurance policy was any good. My policy! Now that was fretting. I should not have been buying policies, I should have been buying stock -- I wish I had, but I can buy only for Action Alerts PLUS. The moves in Lincoln (LNC), Principal (PFG), Hartford (HIG) and MetLife (MET), while not as breathtaking as their declines, are remarkable, made all the more so by the hedge funds that cannot fret without taking action.
What do you think was behind Cree (CREE) being up $7 yesterday, besides that monster target boost? I will tell you. People were fretting that computers were slowing down because the consumer was too strapped. A 7-point move? That's the fretters covering from their ill-informed fretting.
How about these little banks that keep levitating? Again, Regions (RF), Huntington (HBAN), Comerica (CMA), Fifth Third (FITB), Zions (ZION) and Synovus (SNV) are way, way down from when it was right to fret . . . but not anymore. The time to fret was before. Now is the time to buy, because things are getting better.
There was a time when commercial real estate was supposed to devastate the REITs. The fretting was so thick that everything from Federal Realty (FRT) and Vornado (VNO) and Simon Properties (SPG) to the little hotel REITs and Brandywine (BDN) were being smashed down. The action from the fretting is still being unwound.
Everyone fretted about apartment prices and home prices -- the latter are going up, according to the Journal today, and the former bottomed in June of last year.
Health care fretting? What stocks are rocking here? The ones that either produce the most expensive products, like the device companies, the ones that have pricey biotech offerings, or the ones that are cost-containment plays. These were totally overfretted.
The bears could be very right about the Chinese bubble. I heard Jim Chanos warn people about McGraw-Hill (MHP) and Moody's (MCO) before they collapsed. Great call. The problem is that the fretting has led to outrageous shorting in the coppers, steels, coals, iron ores, minerals -- you name it. But the bear case hasn't unfolded, as anyone who owns Freeport (FCX), Vale (VALE), Walters (WLT) or BHP Billiton (BHP) knows.
Plus, we were thinking that industrial America would get hit with massive shortfalls. But don't tell that to the ones that everyone told me to get people out of -- Eaton (ETN) or Cooper (CBE) or Parker (PH) or Emerson (EMR) or 3M (MMM) -- because those companies took decisive action. We were fretting; they were cutting. They won. The fretters lost.
There was a time when you could fret and simply cut back exposure and underperform the S&P with a sizable cash position.
Those days are long gone. The fretters take action in a heartbeat. They short Apple all the way up. They short Hewlett-Packard (HPQ) because Apple's going to take share. They short Western Digital (WDC) because Samsung lowers some target. They short Intel (INTC) because Intel is supposed to go down after going up. Isn't it?
My conclusion? The fretters should worry not about today's three-year auction or FOMC minutes or soaring oil prices -- that's what the media is fretting about -- they should be fretting about fretting.
That's where the real lack of success has come from. That's why people have been, for lack of a better term, so wrong.
Random musings: Maximum fine for Toyota (TM) means maximum sales for Ford (F). Scott Rothbort had a great analysis on the Ford warrants in the Columnist Coversation yesterday. ... Interesting piece on Business Insider found through Twitter on housing as a depressant for inflation. One day this number will be included in the bigger scheme and we will get a truer depiction of what is going on.
At the time of publication, Cramer was long Apple and Intel.
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